In yesterday’s Guardian Jonathan Rutherford and Aditya Chakrabortty argued that the Labour Party needs to abandon the economic policies pursued by both Blair and Brown (Britain’s economy is broken. This is how to start fixing it).  They point out that in relying on growth from lightly regulated financial markets, Labour was aiming for “Thatcherism with a Presbyterian brow.”  Their New Political Economy Network has produced a report putting forward proposals instead for a more Keynesian approach to economic policy, greater state regulation and a fairer share out of economic growth.  This is very much the new consensus emerging around the Soundings Journal, and Compass and its choice for leader of the labour Party Ed Miliband.  This is of course simply a plea for the return to the post-war social democratic consensus that was ruthlessly blown away in the 1970s by the emerging neo-liberal forces around the world, and in Britain by Margaret Thatcher’s Conservative Party.

In many ways this should be a very modest goal since it only asks for moderate restraints on capitalist accumulation in the interests of ‘fairness’ and social cohesion (or, in Ed Miliband’s words, a slightly less brutal capitalism than experienced in the US).  What it lacks though is any sense of history or political analysis.  The underlying causes for the breakdown of social democratic systems (the restraint of social spending and trade union power on private profits, globalisation and the shift to monopoly finance capital) have not gone away.  Rather the adoption of neo-liberalism in developed capitalist states and its promulgation in the developing world and post-soviet economies, (the ‘Washington Consensus’ in which the first duty of the state is to ensure the interests of business rather than its citizens), has effected a colossal boost to the wealth and power of the capitalist class at the expense of everyone else.

As Willie Thompson notes (‘Social Democracy in Perspective’ in Left Out – Policies for a left opposition from

Social democracy, it can be safely concluded, is a busted flush, incapable of developing any vision that could inspire large masses of followers. When voters vote for social democrat parties nowadays they do so only as the least worst option and with very few expectations. The possibility remains that an especially talented leader may evoke enthusiasm, such as Obama did in the USA, but once elected their limitations, or rather the limitations of the political structures, become plain, as has been the case with Obama.

The Labour left, still in denial both about the scale of the defeats of the last thirty years and the lack of popular support for its programme, appear determined to re-fight the battles of the seventies.  This is bound to result in even more disorientation and retreat.

If the Labour left is stuck in a ‘back to the future’ mentality, the right has no such illusions (see Peter Kellner’s Demos tract The Crisis of Social Democracy).  It responded to the party’s 1983 election defeat and the left’s disarray by accommodating the new conservative hegemony.  Accepting Thatcher’s command that “there is no alternative,” Kinnock began the process of discarding all policies seen to make the party ‘unelectable’.  Then Blair and Brown, pushing at an open door, converted it to New Labour – Thatcherism with a human face.  Despite Labour’s general election defeat, the dominance of the New Labour project (a centralised, authoritarian state dedicated to facilitating economic growth by deregulating financial markets, privatisation and ensuring a ‘flexible’ labour market) looks set to continue, and its representative, David Miliband, is favourite to take over as leader.  He appears not only to have considerable financial support for his campaign (from where I wonder?) but also the support of much of the party and the media ‘commentariat’ (see Will Hutton for example).

The main thing that differentiates New Labour from the Conservatives is that while the Tories see the recent crisis of capitalism and the resulting burden for public spending as an opportunity to extend the class power of the capitalist elite, Labour only admits to having to enforce unfortunate though necessary measures.  But what both New Labour and social democrats share of course is the unquestioning faith that, with the correct policies (neo-liberal or neo-keynesian), a Labour government could manage a stable and sustainable capitalism.  A utopian capitalist faith.